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Citi obtains full interbank bond license in China

By Leng Cheng | February 7, 2017, Tuesday | Online Edition

CITI China said today it has got a bond settlement license from the People’s Bank of China, making it the first US lender who receives the approval in China’s interbank bond market.

The “Type A” license would allow Citi China to trade, settle and provide custody for interbank bond market products. Before the approval, four other foreign banks, Deutsche Bank, BNP Paribas, Standard Chartered Bank and HSBC hold the same license.

Despite default-triggered turbulence in China’s bond market late last year, Citi’s license comes as China expands interbank bond market access to foreign investors in recent years. Market players also consider the central bank’s decision as an outcome of the Chinese yuan’s significance on a global stage.

“China’s bond market is exciting and dynamic as China accelerates the internationalization of RMB,” Christine Lam, president and chief executive officer of Citi China, said in a statement.

Chinese bond market has grown more than six fold since 2005 to become the third largest globally by issuance, according to China Central Depository & Clearing Co. The interbank bond market accounted for over 90 percent of total issuance, it said.

As of the end of 2016, the value of bonds outstanding in China had reached 64.27 trillion yuan (US$9.3 trillion), Citi China said, citing financial data services provider Winds.

JPMorgan Chase & Co, another US bank, said on Monday that it had received approval and license from the National Association of Financial Market Institutional Investors to underwrite corporate bonds in China’s interbank bond market.

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